Need a lender for a unique jumbo cash out refi situation

[Graham K.]

Two and a half years ago my wife and I bought a fixer SFR for $450k in a neighborhood where houses rarely sell for less than a million. The rehab cost more than expected (surprise surprise) at about $650k. So we're in it for at least $1.1M but the good news is that by conservative estimates, it's now worth at least $1.2M so I think we came out okay. The problem now is that we spent nearly all our cash and we want to keep this house as a rental and buy another primary residence or maybe build an ADU or even do both.

What I'd like to do now is an 80% LTV cash out refinance. That'd be a loan amount of $960k. Our current mortgage balance is $343k so we'd cash out $617k. However, every lender I've applied with so far won't do a loan amount over $780k (which I thought was odd as I would have expected any such cap to be $765k, the conforming loan limit in this area).

Do you have experience doing a jumbo cash out refi? 

Side notes:

• Our application is solid. We have no other debt, our credit scores are over 780, and we have the income and assets to qualify. And the house will appraise, I am confident of that.

• I don't want to do a smaller loan amount on the cash out refi and then take a HELOC for the rest. I am very interested rate and interest expense sensitive. I wouldn't hesitate to spend $28k on points to get the lowest rate.

• We plan to stick pretty much all of the cash out into high interest savings accounts until we decide our next move. Why cash out now and start paying interest on money we’re not going to use right away? Because I want to keep all of our investment options on the table and not worry about a change in the housing market or lending environment.   

• We plan to keep the house for at least 30 years. It’s a retirement play.

• Rental income will start off around $6000-7000 so I expect to be break even in the long run and I’m fine with that.

• We moved back into the house. We think we’ll live here 1-5 years before buying our forever home.

I’m open to alternative scenarios I haven’t thought of.